Overview Furniture is one of the most rapidly growing sectors in Bangladesh, graduating in the last 15 years from a cottage-based to a manufacturing industry. The manufacturing of wooden furniture accounts for 0.29% of the country’s GDP, and in 2008-09 the value addition amounted to BDT1.8b with an export volume of USD1.8m . The industry employs more than 250,000 workers. The sector, growing at 19.5% pa, aims to export USD40m by 2015, along with an additional USD10m in exports of accessories and furniture textiles .

This has the potential to increase to USD1b by 2020 provided productivity increases, market linkage improves, and compliance standards are met. The effective demand-supply gap in the domestic urban market by 2014 is estimated to be USD60m.

This is a highly labor-intensive industry, and consists mostly of small and medium enterprises (SMEs). It is organized into 121 urban and peri-urban clusters, comprising 9,913 enterprises, out of which only 35 can be identified as large firms, while the others are small and medium-sized, employing less than 150 employees. However, the industry is represented by another 74,926 freelance carpenters and carpenters' households, where between one and three labourers work independently. Those involved have usually migrated from rural areas, and can initially expect to earn BDT1,500 per month, which increases to BDT8,000 or more per month as skill level and experience grow. Furniture has the potential to play an important role in favor of the poor, as growth in this sector can increase income for small enterprises, and at the same time can generate higher income for existing and new workers, as the sector offers both conversion and absorption of laborers.

A comparison of the growth rates of enterprises and employment indicates that on average, a 1% growth in firms employing more than five workers results in labor force growth of above 1% (Katalyst, 2009). Moreover, each USD1,000 of export sales requires an additional 2.03 laborers in large firms (Katalyst, 2010). About 7% of the workforce in the large firms of Dhaka and Chittagong are women, concentrated mainly in finishing and sanding. Lately, manufacturers have started employing women workers not only for their skill in manufacturing itself, but also because the finesse of the finished products, which is comparatively better than that of the male workers.

Katalyst's Strategy

The vision of Katalyst’s involvement in the Bangladesh furniture sector is to increase the competitiveness of furniture SMEs and carpentry households for the domestic and export markets. While responding to market demand, firms are expected to adhere to compliance standards, follow environment-friendly measures and proactively encourage employment opportunities for women. By 2013, Katalyst aims to develop sustainable market mechanisms by stimulating four major changes in the furniture sector, which are as follows:

Interventions

• Increasing the productivity of furniture enterprises and carpentry households
  
  The productivity of furniture firms depends on enhanced skills, appropriate layout and machining facilities, knowledge of the latest finishing and joinery techniques, availability of up-to-date wood working technology and positive working conditions. Favorable working capital costs and low- cost quality raw materials also contribute to increased productivity. Katalyst will partner with Berger (for finishing, joinery, design, and appropriate use of materials), PT&F (to supply power-tools, and training on their usage and safety), Confix (woodworking machine usage, safety, efficient layout), Global Lumber (advice on appropriate grade and fibre yield of timber) and Rupali Bank (low cost working capital) for market assessment, market linkage and embedded service offers aimed at benefitting the furniture enterprises and carpentry households. Katalyst will also collaborate with Shahjalal University of Science and Technology (SUST) to develop furniture production consultants who will support the industry in future. Katalyst, with its partner the Export Promotion Bureau (EPB), will support the industry in harmonizing import tariffs on raw materials.
  


• Improving marketing practices for domestic and export markets
  
  The market expansion of the furniture firms depends on prospecting, business-to-business linkage and information on the target market and potential suppliers. Katalyst will collaborate with the EPB, furniture associations (national and export), and local marketing firms to develop a marketing program aimed at addressing these issues and ensuring expansion in both the domestic and export markets for both small-to-medium and large enterprises.
  


• Enhancing the policy advocacy capacity of furniture associations
  
  This intervention area overlap with the first. The industry has been lacking the collective voice necessary to pursue tax harmonization and other regulatory issues, and this hampers productivity. Katalyst will collaborate with furniture associations to link them with the EPB, which is mandated to support those industries with export potential. Katalyst will also support the associations in media orientation in order to further strengthen their voice.
  


• Including craft accessories as a profitable product line in furniture retailing
  
  Including craft -based accessories in the product line helps furniture companies to maintain a profitable portfolio and ensures integration of rural artisan microenterprises to utilize their capacity to earn better profit. With growing consumer demand for accessories, Katalyst introduced the concept to local furniture firms (following the successful example of international chains such as IKEA, Pottery Barn, Ethan Allen and leading national chain Otobi, albeit with Chinese products this isn’t clear). Katalyst will partner with Hatil, an industry trendsetter, and Orbachin, an intermediary supplier to other firms, to develop concepts for accessories which are suitable for furniture, with a view to developing embedded design and technical support for rural micro-enterprises as supply chain members.

Co-facilitators and Partners

Katalyst will work with Innovision Consulting Private Ltd to implement interventions in the sector.

PDF version of this brief

Furniture and crafts [ Size : 607 KB]